00:00My man, Julian Gray, we've become very good friends. He gives insane advice.
00:04I cannot tell you how many people say, hey, what's that guy's name, Julian Gray, that helped, right?
00:09This happens all the time.
00:10Because my man cares, and he helps people, and he does it the right way.
00:15So, it's kind of crazy how our life has changed.
00:20Our entire lives, the most valuable asset we had was the Haas.
00:24Used to be your Haas.
00:25The Haas.
00:25The Haas.
00:26Not no more, because most people don't have all the equity.
00:29Right.
00:29Most people are going to be paying on it until they're 70.
00:32The most valuable asset is what?
00:34Your individual retirement account.
00:36So true.
00:37Your IRA.
00:37And with the market doing this, a lot of people are making a lot of money with that.
00:44And so, that's a big decision, sir, how to manage it, right?
00:47Yeah, and that's what good financial planners do, Marty, right?
00:50They're good at building your IRA.
00:52They're good at managing risk, right?
00:55All those things.
00:55But what a lot of people don't talk about is what's your exit strategy for your IRA, right?
01:01First of all, what's that mean, exit strategy?
01:03Well, how do you get out of that IRA, right?
01:05If you think about it, you build that thing for decades while you're working, but you haven't paid a dollar of income tax on that, typically, until you're at least in your 60s.
01:15But most people try to push it off until they're mid-70s.
01:18And now the IRS, with the new rules that just came out, is going to allow people to leave that there until they're 75 years old.
01:25Oh, oh.
01:26So imagine how much tax you haven't paid yet, or more importantly, your kids are going to pay someday.
01:31So you do have to pay tax.
01:32Yeah.
01:33And so think about it.
01:34Back in the old days, we used to have what was called the federal estate tax.
01:37And everyone got really nervous because they said, if you have some amount of wealth, you had to pay 40% when you died to the IRS.
01:45Remember this.
01:46Well, guess what?
01:47When you have an IRA, let's say you have a half a million dollars in your IRA when you die, or a million dollars or more, guess what you've got to pay?
01:55About 35% tax to the IRS.
01:57Immediately.
01:58Well, no, but over the 10-year term whenever you die.
02:01And so what's interesting is, and if you're a Pennsylvania resident, listen up, you have to pay 4.5% death tax on your entire IRA within nine months of the date of death.
02:12So if you died with a million dollar IRA in Pennsylvania, your kids have got to pay $45,000 in Pennsylvania inheritance tax within nine months of the date of death on the whole thing.
02:23And then on top of that, they're going to get hit with all the income tax on their tax returns over that payout period, which is usually 10 years.
02:31Oh.
02:32So the other thing people don't realize is, remember when we talked about your house was your most valuable asset?
02:38I used to have people come in the office 20, 30 years ago that said, I'm worried about long-term care costs.
02:43How do I protect the family home?
02:45Right?
02:45There was a big emotional attachment.
02:47We talked about it, brother.
02:48Oh, yeah.
02:49There's a great emotional attachment to the family home.
02:51People want to protect it.
02:52So we would put those into trusts.
02:54Well, now people say, I want to protect my IRA from being spent down for nursing home care.
03:00So that's a whole other issue you have to deal with.
03:02And it's very complicated.
03:04So hold on.
03:04Can you protect some of that?
03:05Absolutely.
03:06Oh.
03:06Yeah.
03:07So I always tell people, if you're age 65 or older, it's time to sit down and look at what are your options.
03:14And really, you should ask your financial planner.
03:16If you have an estate planning attorney, you should ask them and say, how do I protect my IRA from long-term care costs and taxes?
03:25And if they don't know, you can talk to us.
03:28We know how.
03:29Or you can visit us at grayelderlaw.com.
03:31We can give you some information.
03:32So hold on.
03:32They can come after your IRA, too?
03:34Absolutely.
03:34Wow.
03:35We've watched, Marty, unfortunately, like I said, people will spend 30, 40 years building that IRA.
03:41Then they have that long-term care event.
03:43We've talked about it all the time.
03:44Nursing homes, $15,000 a month right now in Pennsylvania.
03:48And it's all pretty much no insurance coverage.
03:51Medicare covers a little bit, but not much, a couple weeks.
03:54And so what do they do?
03:56They call their financial planner and they say, liquidate another $20,000 from my IRA to pay the nursing home this month.
04:03Wouldn't it have been really helpful if they would have talked to their financial planner or their attorney a few years ahead and protected that?
04:11What about the long-term care insurance?
04:13I know some people have.
04:14Long-term care insurance, great if you have it.
04:17Only 10% of the people in our country have it.
04:20And there's a lot of reasons for that.
04:21I mean, just a lot of people don't believe in it.
04:23They think they'll never use it.
04:25They can't qualify medically.
04:27So that's really not always the answer for most of our clients.
04:30But people that haven't, hey, good for you.
04:32So hold on.
04:33Do you learn to protect your IRA and the house?
04:36You can protect your IRA and the house and you can mitigate taxes.
04:40There are certain types of asset protection trusts that we've been doing for decades that can help you to do this.
04:45And like I said, complicated to go over in a short video like this.
04:48No, no, no, it's amazing.
04:49But if your financial planner and your estate planning attorney have not said to you, here's how you can protect your IRA from long-term care costs and reduce taxes, we'd be happy to talk to you about how you can do with that.
05:01I love them.
05:02I sat down with him in the same room with my wife and planned our estate because of him and his advice.
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